Registered disability savings plan (RDSP)
Help provide long-term financial security for someone with a disability and receive grants.
Contact an advisor at the Desjardins Financial Centre to open an RDSP.
What is an RDSP?
The RDSP allows you to help save for the future of someone with a disability who is eligible for the disability tax credit (DTC). You can open an RDSP for yourself or someone else.
RDSP advantages
Government grants
According to family net income and RDSP contributions, the government provides grants and bonds that don't affect the other benefits the beneficiary receives.
Tax-sheltered returns
You can contribute up to $200,000 to an RDSP and grow your money tax-free. The beneficiary pays tax on the generated earnings and grants only when they withdraw funds.
Long-term financial security
The RDSP helps build the beneficiary's financial future and gives their loved ones peace of mind.
RDSP rules
RDSP eligibility
- As the plan holder, you have a valid Social Insurance Number (SIN)
- The beneficiary must be eligible for the disability tax credit (DTC), be a Canadian resident, be under 60 and have a valid SIN
RDSP contributions
The lifetime contribution limit is $200,000. You can contribute from January 1 to December 31 each year, but you can't deduct contributions from your taxable income. You can contribute until the end of the year the beneficiary turns 59.
Who can contribute to an RDSP?
The following people can make contributions:
- The plan holder
- Anyone with written permission from the plan holder
Transfers from other savings plans to an RDSP
Upon a parent's or grandparent's death, you can transfer money from their RRSP, RRIF or registered pension plan (RPP) to a financially dependent child's or grandchild's RDSP. In this case, the usual government grants won't be given for the transferred amount.
If the RDSP beneficiary is also the beneficiary of an RESP and has a severe and prolonged mental impairment that will likely prevent them from pursuing post-secondary education, under certain conditions, the income earned in the RESP can be transferred to the RDSP without a tax penalty.
RDSP grants
When you open an RDSP, you apply for 2 types of grants as the plan holder:
- Canada disability savings grant (CDSG)
- Canada disability savings bond (CDSB)
How much money you get depends on family income and contributions. You can receive these grants until December 31 of the year the beneficiary turns 49.
Canada disability savings grant (CDSG)
For eligible contributions you make, the beneficiary can get up to $3,500 per year and $70,000 over their lifetime with the Canada disability savings grant (CDSG) External link..
Canada disability savings bond (CDSB)
If the RDSP beneficiary is considered a low-income individual, they may be eligible for the Canada disability savings bond (CDSB) External link. and be able to get up to $1,000 each year and a lifetime limit of $20,000. No RDSP contributions are required to get the bond.
RDSP withdrawals
There are 2 types of RDSP withdrawals:
- Lifetime disability assistance payments (LDAPs): these are recurring withdrawals set up to receive income, and are paid as long as there are funds in the plan
- Disability assistance payments (DAPs): these are single withdrawal requests made according to the beneficiary's needs
The beneficiary pays tax on the grants, bonds and investment income portion of the withdrawal, but not on the original contributions.
Lifetime disability assistance payments (LDAPs)
Lifetime disability assistance payments (LDAPs) are regular payments made to the beneficiary. Once LDAPs start, they must be made at least once a year until the funds in the plan run out or the beneficiary dies.
You can request an LDAP at any time. However, the first one must be made by the end of the year the beneficiary turns 60.
Disability assistance payments (DAPs)
A disability assistance payment (DAP) is a lump-sum payment that can be made to the beneficiary at any time, under certain conditions.
Tax on RDSP withdrawals
An RDSP withdrawal has a taxable and non-taxable portion. Grants and bonds received and the earnings they generate are added to the beneficiary's taxable income. This means that the beneficiary pays tax on this portion of the withdrawal. Plan contributions aren't taxed.
These payments don't affect the beneficiary's federal benefits based on income. LDAPs (up to $950 per month) aren't included in the beneficiary's income if they're getting Social Assistance payments.
RDSP 10-year rule
The funds must stay in your RDSP for at least 10 years before they can be withdrawn, or you might have to pay back the government grants and bonds in the plan.
RDSP calculation example
Say Catherine's parents open an RDSP for her at age 10. For the first 9 years, their annual family income is higher than the threshold, so contributing $1,000 each year gets them $1,000 maximum in matching grants.
Once Catherine turns 18, only her income is used for matching purposes. Since Catherine's annual family income is then lower than the threshold, contributing $1,500 each year gets her a maximum of $3,500 in grants and $1,000 in bonds. She contributes until age 39, when she'll have received the maximum grants and bonds. Her investments will keep growing until age 60.
| Source of income | Amount |
|---|---|
| Total contributions | $40,500 |
| Grants | $70,000 |
| Bonds | $20,000 |
| Investment income | $221,502 |
| Total at age 60 | $352,002 |
Investment options for an RDSP
Find out which investments you can hold in your RDSP.
Guaranteed fixed-rate investments (term savings)
Enjoy a known return on your investment from day one. Both your capital and interest are guaranteed.
Market-linked guaranteed investments
Harness the growth potential of stocks without risking your capital.
Regular Savings Account
Save for short-term goals with no minimum deposit required.
FAQ
Can I deduct RDSP contributions from my taxable income?
No, you can't deduct RDSP contributions from your taxable income.
What happens to the RDSP in the event of the beneficiary's death?
In the event of the beneficiary's death, only grants and bonds in the RDSP received in the preceding 10 years will have to be paid back to the government.
The remaining balance will go to the beneficiary's estate on the liquidator’s instructions, as a disability assistance payment (DAP) with a taxable and non-taxable portion.
What happens if I can't make RDSP contributions every year?
You don't need to make contributions to receive bonds. When you open the RDSP, you are eligible for bonds from the past 10 years, up to $11,000. After that, the bonds will be paid into the RDSP every year.
For grants, by contributing to the RDSP, you may be able to carry forward up to 10 years of unused entitlements, up to $10,050 per year. You can carry forward unused grants and bonds before the end of the year the beneficiary turns 49. However, the beneficiary must have been eligible for the disability tax credit during those years.
What does "plan holder" mean for an RDSP?
The plan holder is the person who signs the contract to open the RDSP. A parent, legal representative, curator, guardian, public department, agency, institution or the beneficiary can be the plan holder.
Can someone be a beneficiary of more than 1 RDSP?
No, someone cannot be a beneficiary of more than 1 RDSP.
Contribute to your RDSP
Contact an advisor at the Desjardins Financial Centre to open an RDSP.
By phone
Monday and Tuesday: 9:00 AM to 5:00 PM
Wednesday and Thursday: 9:00 AM to 7:00 PM
Friday: 9:00 AM to 4:30 PM
How to open the RDSP
1. Contact an advisor at the Desjardins Financial Centre
Discuss your needs with an advisor and open an RDSP.
1-877-286-3420 Phone number for Desjardins Financial Centre to open an RDSP. This link opens your phone app.
2. Choose your investments
According to your savings goals and investor profile, your advisor will help you choose the right investments for you.
3. Start contributing
Contribute to your RDSP now or set up automatic transfers.